Broadband internet adoption slows in Europe

But UK growth continues unabated

By Paul Meller, IDG News Service

February 2, 2007

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The take-up rate of broadband internet access slowed sharply across Europe last year.

At the same time former monopoly operators are reclaiming market share lost to rivals in recent years in some key markets, the European Competitive Telecommunications Association (ECTA) said in a statement Thursday. ECTA believes the two trends are connected.

Growth in the number of broadband subscriptions grew 7% in the third quarter of last year, compared with 23% in the third quarter of 2005, according to the ECTA Broadband Scorecard, a quarterly analysis of the market.

Growth almost stalled in a number of countries including Denmark and Belgium, which experienced just 3% growth. France saw growth slow to 10% after a much stronger performance in 2005, the report found. Spain, Sweden and Austria also suffered a slowdown, it said.

But the UK gained another place in the rankings, going from eighth in Q3 2004 to sixth in the same quarter of last year. And France has fallen to eighth place in ECTA's scorecard, well behind the UK for the first time.

"The Scorecard shows that growth has stalled in a number of countries where we have seen the power of the incumbent on the increase," said Steen Clausen, managing director of ECTA.

"This is extremely disappointing news from some of the countries which have traditionally been at the forefront of Europe's broadband revolution," Clausen said.

"Until recently France was the poster child for broadband with some of the most attractive triple play packages in Europe. It now needs to be vigilant if it is to maintain its position," he added.

"It seems that the UK has learnt some of the lessons that propelled France up the league table, and is now reaping those rewards with a multitude of offers to consumers. Germany too is starting to show signs of progress which is very welcome after a slow start," Clausen said.

Europe is home to some of the world's leading broadband countries. However, its position in the fast track of broadband take-up globally could be put at risk if regulators do not act to re-enforce competition and open markets, ECTA warned.

The link between increased power for incumbents and stagnation has been confirmed by studies, including one from SPC Network, which concluded that Europe could gain an extra 20 million broadband lines by opening markets further to competition.

"This is a powerful warning for governments not to protect national champions, either now or for the future," Clausen said. "Monopolies have never been good for consumers, and in some industries governments have to take action to let competition flourish. In energy for example, the Commission is proposing extra measures to open markets to competition. We believe this could provide some valuable lessons for telecoms."

The ECTA Broadband Scorecard is available at the association's website.